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Retirement Planning

The 4% Rule

Ever heard of the 4 percent rule?

Here’s the idea from the ivory towers on Wall Street…
“The 4 percent rule is a rule of thumb used to determine how much a retiree should withdraw from a retirement account each year. This rule seeks to provide a steady income stream to the retiree while also maintaining an account balance that keeps income flowing through retirement.”

Make sense right?

Pretty straight forward to understand.

But there’s a problem…many of the ‘top dogs’ on Wall Street link, Morningstar, are now saying the 4% is too aggressive. It’s more like the 2.8% rule now.
So, is this even still relevant in today’s world?

For some, maybe…

For most probably not.

For example, what if you have the majority of your money is in volatile places and a recession hits again?

Or even a market downturn or crash?

That could significantly impact whether or not 4 percent will last you for life.

And running out of money is never fun.

Smarter move is to play it safer the closer you approach retirement as most financial experts would agree.

Recently some financial experts have claimed that the 4 percent rule is no longer valid.

And others say it is completely wrong.

Here’s a good article on it right here on Kilpinger.com

Here are my thoughts on the matter.

With Social Security becoming strained, the national debt increasing, Medicare costs most likely going up in the future, and more market volatility…

It may make sense to not just think about the 4 percent rule on the largest pile of pennies you can accumulate.

Since it doesn’t leave you with a ton of flexibility in an ever-changing world.

Instead, you might want to focus on building up your pennies in assets that will provide you life long cash flow.

Own Privately.

Control

And can access the money without all the strings attached.

That’s not what you’re going to hear from the status quo…

They say things like…

“Put all that money into a 401(k) and let things ride.”

Sure, having a portion of your money in a qualified plan could make sense.

I would caution highly of putting all your pennies there.

Since you have less control, not a lot of access, and are in business with the government (Not private)

For us, we prescribe to the notion of building wealth privately.

Better to keep it private, under your control, and guaranteed if possible with some tax benefits.

That’s my biased opinion.

Of course, you can do what you choose with your pennies.

With mine I keep them in cash flow producing assets, that have market loss protection, can weather a low-interest environment, have tax advantages and at some point will give me either a guaranteed or tax-free cash flow for life.

If that sounds like something you’d be interested in, schedule a 15 minute call and l and I can get you some more info on how it works…

Schedule Here